New Homes Smaller, but Not in Price

New-home buyers are downsizing their square footage to better suit their lifestyles, but are not necessarily paying lower prices for their new-construction homes, say some homebuilders. In several cases, new-home buyers are probably spending more per square foot in order to be cost-efficient on heating and cooling, while opting for upgrades, such as granite countertops and stainless steel appliances.

"Building right now is a little more cost-effective than it was in the boom," says David R. Werschay, CEO of Werschay Homes in St. Cloud, Minn. who sees a different attitude among new-home buyers. "Customers say, 'I want the house to function for my lifestyle, I don't need the space.' Back in the day, when husband and wife both wanted an office, you just made two offices. Now we're seeing, 'Let's make one office and design it so both of us can work out of it,'" he says.